Watchdog's 'deal' with Equitable

REVELATIONS tucked in the 818-page Penrose report about the cosy-seeming relationship between former Equitable Life boss Roy Ranson and insurance regulators could bolster the policyholders' case for compensation, action groups have said.

Penrose paints a vivid picture of dealings between Ranson and Michael Pickford, an official at the Government Actuary's Department.

This and other findings are likely to cause discomfort for the Government ahead of the Treasury Select Committee hearing on Equitable next week.

Pickford bumped into Ranson at professional meetings and Institute of Actuaries functions. Following one such encounter in 1991, Ranson sent him some secret boardroom papers aiming to clarify Equitable's strategy.

But Penrose criticised the official for apparently failing to pass the documents - which contained 'critical information' on Equitable's precarious finances - to the Department of Trade and Industry because of 'a private understanding' between the two men.

Pickford also intervened on Ranson's behalf in a debate among regulators over whether the Equitable boss should be allowed the dual role of chief executive and appointed actuary. Ranson took both jobs and gained his fateful stranglehold on power.

Ruth Kelly, Financial Secretary to the Treasury, has made clear the Government's reluctance to pay compensation.

But Vanni Treves, Equitable's new chairman, said: 'The Penrose report highlights a catalogue of failure by the regulatory regime in place at the time.'

He called on the Parliamentary Ombudsman to reopen her inquiry, saying: 'She has the power to recommend compensation.'

Paul Weir, of the Equitable Late Contributors Action Group, called the revelations 'an example of the sort of thing Ruth Kelly has chosen not to mention'.

The Treasury, responding on behalf of the Government Actuary's Department, was not immediately available for comment.